The Business Case for a Financially Resilient Workforce

From reduced healthcare costs to improved performance, both

employers and employees benefit when the workforce is financially
resilient.

Every time we face a large scale financial

crisis the word “resilience” rises to the top of
our national dialogue. Broadly speaking,
resilience is the ability to “bounce back” when
encountering life’s inevitable challenges. 1

These range from the day-to-day challenges

we all face to more traumatic hardships such as the death of a loved one,
serious illness or injury, or a job loss. Being able to weather and recover from
life’s small and large challenges is at the heart of building resilience, and financial
resilience (i.e., the ability to address and overcome a financial challenge) is an
especially important subset.

Recent years have had no shortage of financial challenges. From the COVID-
19 crisis, to the partial government shutdown in 2018-19, to the collapse of the
housing market in 2008, many Americans have faced significant financial
hardship. These risk events have underscored the importance of financial
resilience.

Even during the good times, millions of Americans were already living their daily
lives under financial strain. In 2019, despite a strong economy, only 29% of
Americans were financially healthy.2 Most Americans were not in a position to
readily bounce back from even a modest financial shock, and the workforce
continues to be largely populated with individuals who have low financial
resilience. This impacts U.S. businesses in significant ways.

Understanding the Business Cost of Low Resilience

Lack of resilience, especially financial resilience, adds healthcare costs to

U.S. businesses of approximately $190 billion dollars per year.3 Lost
workdays alone account for almost $30 billion annually.4 Productivity also
takes a hit, as employees with low resilience tend to be more distracted at
work (and thus more prone to workplace accidents) and less productive.5

Compounding this is emerging research in psychology and economics

around the “cognitive tax” that follows individuals into the workplace when
facing persistent financial worry.5 This “tax” is an energy and attention drain
that slows down an individual’s ability to be productive in the workplace. Put
another way: worrying about money means an employee is unable to
perform at their highest potential. And that has consequences for employers.

Making the Business Case to Build a Financially Resilient Workforce

Although education is a vital component, building and sustaining the

business case for a financially resilient workforce requires more than just
highlighting the costs of low resilience. Employers also need to understand
the challenges their employees face and design a program that helps
alleviate them. To do this, employers can incorporate the following best
practices into their programs:

● Diagnose and Design: Understanding the financial needs of

employees using HR data and survey tools can help an employer
translate those needs into actionable decisions about where to invest
in programs. For example, an employer may look at their retirement
plan participation rates and notice that significant numbers of
employees do not participate. Through the accompanying survey the
employer may learn that the reason for this is due to student loan debt,
which may result in the employer adding or redesigning a student loan
solution.

● Financial Coaching as a Pillar of Resilience: Employees’ needs

change over the course of their life, as their family, finances and
challenges change. They can benefit from a flexible and responsive
 coaching program that helps address and meet their evolving financial
needs. In practice, a coaching program should be integrated with a
communication strategy that builds awareness and engagement,
particularly at key moments such as new hire orientation, or when the
employer knows that the employee has entered a new life stage (e.g.,
new baby, etc.).

● Financial Coaching and Mental Well-Being: A good coach will also

help individuals and their families approach money decisions more
thoughtfully, helping reinforce principles such as mindfulness, goal-
setting and self-growth that can help build financial resilience.6 How
people think about money can play a big role in how they approach
financial challenges. If an employee feels overwhelmed, having a
coach to help them make a balanced and realistic decision can keep
the challenges in perspective, alleviate their stress and build their
resilience.

● Don’t Forget About Measuring Impact: Having a measurement

framework with key success indicators can help employers understand
whether interventions are having the desired impact. Employers do not
have to reinvent the wheel here. They can leverage the same HR data
sets and proven survey tools (as mentioned in the Diagnose and
Design bullet) to capture trends and track progress over time.

Financial resilience does not happen overnight. Individuals will need time to
engage with any new program, build their capacity and ultimately improve
their financial wellness. But with consistent communication and
encouragement from you and other workplace leaders, you can build a
lasting program that helps improve people’s financial lives—and that will help
lower your costs and boost your organization’s performance.

Learn more about Morgan Stanley at Work, helping companies and

individuals wherever they are on their journey of wealth creation.
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This article is for informational purposes only. The information and data in the article
has been obtained from sources outside of Morgan Stanley and Morgan Stanley makes
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CRC 3188357 10/2020

1
Warell, Margie "Resilience: Expand Your Bandwidth to Cope Better and Recover Faster", (Forbes, April
7, 2020). https://www.forbes.com/sites/margiewarrell/2020/04/07/build-resilience/#6a9d0f9a307a

2
Financial Health Network, “U.S. Financial Health Pulse Finds Only 29% of People Living in the U.S.
Financially Healthy”, November 2019 (accessed on June 14, 2020) https://finhealthnetwork.org/u-s-
financial-health-pulse-finds-only-29-of-people-living-in-the-u-s-financially-healthy-3/.
3
Schelnez, Robin, "Job-Burnout is a Billion Dollar Problem. Can We Fix It, Despite Covid-19" (UC
Berkeley, September 3, 2020) https://www.universityofcalifornia.edu/news/job-burnout-billion-dollar-
problem-can-we-fix-it-despite-covid-19
4
The Harvard Gazette, “The High Price of Workplace Stress”, July 2016 (accessed on June 30, 2020),
https://news.harvard.edu/gazette/story/2016/07/the-high-price-of-workplace-stress/; (also cited January,
2020, https://www.keeneys.com/who-we-are/latest-news/reduce-stress-workplace/).

5
Carrie Leana “The Costs of Financial Precarity”, Spring 2019 (accessed on June 28th, 2020)
https://buildcommonwealth.org/assets/downloads/Leana_Cost_of_Financial_Precarity_SSIR_2019.pdf.

6
American Psychological Association, “Building Your Resilience”, 2012 (accessed on June 25, 2020)
https://www.apa.org/topics/resilience.